Porter Five Forces Model

Indian Automobile Industry
The Indian automobile industry is the tenth largest in the world with an annual production of approximately 2 million units. Indian auto industry, promises to become the major automotive industry in the upcoming years and the industry experts are hopeful that it will touch 10 million units mark. Indian automobile industry is involved in design, development, manufacture, marketing, and sale of motor vehicles. There are a number of global automotive giants that are upbeat about the expansion plans and collaboration with domestic companies to produce automobiles in India.
Porter's five forces model on Automobile Industry * Barriers to Entry – Automobile Industry is a capital extensive and labor extensive industry. The emergence of foreign competitors with the capital, required technologies and management skills began to undermine the market share of many automobile companies. Globalization has lead to huge investments and has caused businesses to move from national and domestic markets to a worldwide environment which is a huge factor affecting the auto market. Off late, it is becoming easier for foreign automakers to enter the Domestic market .Automobiles depend heavily on consumer trends and tastes. While car companies do sell a large proportion of vehicles to businesses and car rental companies (fleet sales), consumer sales is the largest source of revenue. For this reason, taking consumer and business confidence into account should be a higher priority than considering the regular factors like earnings growth and debt load.

* Threat of Substitutes - Rather than looking at the threat of someone buying a different car, there is also need to also look at the likelihood of people taking the bus, train or airplane to their destination.…...

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...Porter’s Five Forces Model
Porter’s Five Forces is an economic model used to characterise industries and markets, and combine to make up the business environment.
Porter explains that by studying the structure and underlying dynamics between these forces, Nokia can discover opportunities for improving their marketing strategies, along with determining the industry attractiveness, competitiveness and long-run industry profitability. These five forces are also known as "competitive forces".
Michael Porter has identified five forces that are widely used to assess the structure of any industry, along with evaluating what drives competition. Porter’s five forces are:
1. Existing Competitive Rivalry
2. Potential New Entrants
3. Threat of Substitutes
4. Bargaining Power of Suppliers
5. Bargaining Power of Customers
Existing Competitive Rivalry
The most common and direct threat to a business or organisation is through their rivals and competitors. This usually occurs in a market that sells the same product or offers similar facilities and services, to a population of the same customer base. Overall, general markets are known and seen to be more competitive. The more firms that will operate in the markets the easier it will be for the customers to shop around. Even a minority of firms can dominate a market, for example, supermarkets; even they can cause intense competition.
For example, “some forms of competition, such as price competition, are highly......

...deciding whether to switch career and become a farmer – he's always loved the countryside, and wants to switch to a career where he's his own boss. He creates the following Five Forces Analysis as he thinks the situation through:
Figure 2 - Porter's Five Forces Example - Buying a Farm
This worries him:
The threat of new entry is quite high: if anyone looks as if they're making a sustained profit, new competitors can come into the industry easily, reducing profits.
Competitive rivalry is extremely high: if someone raises prices, they'll be quickly undercut. Intense competition puts strong downward pressure on prices.
Buyer Power is strong, again implying strong downward pressure on prices.
There is some threat of substitution.
Unless he is able to find some way of changing this situation, this looks like a very tough industry to survive in. Maybe he'll need to specialize in a sector of the market that's protected from some of these forces, or find a related business that's in a stronger position.
Key Points:
Porter's Five Forces Analysis is an important tool for assessing the potential for profitability in an industry. With a little adaptation, it is also useful as a way of assessing the balance of power in more general situations.
It works by looking at the strength of five important forces that affect competition:
Supplier Power: The power of suppliers to drive up the prices of your inputs.
Buyer Power: The power of your customers to drive down your......

...Porter's Five Forces Model: analysing industry structure
Author: Jim Riley Last updated: Sunday 23 September, 2012
Overview of the Five Forces Model Porter identified five factors that act together to determine the nature of competition within an industry. These are the: Threat of new entrants to a market Bargaining power of suppliers Bargaining power of customers (“buyers”) Threat of substitute products Degree of competitive rivalry
He identified that high or low industry profits (e.g. soft drinks v airlines) are associated with the following characteristics:
Let’s look at each one of the five forces in a little more detail to explain how they work. Threat of new entrants to an industry If new entrants move into an industry they will gain market share & rivalry will intensify The position of existing firms is stronger if there are barriers to entering the market If barriers to entry are low then the threat of new entrants will be high, and vice versa Barriers to entry are, therefore, very important in determining the threat of new entrants. An industry can have one or more barriers. The following are common examples of successful barriers:
Barrier Investment cost Notes High cost will deter entry High capital requirements might mean that only large businesses can compete Lower unit costs make it difficult for smaller newcomers to break into the market and compete effectively Each restriction can act as a barrier to entry E.g. patents provide the patent holder with......

...What is it?
Framework/theory
Porter's Five Forces of Competitive Position Analysis were developed in 1979 by Michael E Porter of Harvard Business School as a simple framework for assessing and evaluating the competitive strength and position of a business organisation.
This theory is based on the concept that there are five forces that determine the competitive intensity and attractiveness of a market. Porter’s five forces help to identify where power lies in a business situation. This is useful both in understanding the strength of an organisation’s current competitive position, and the strength of a position that an organisation may look to move into.
Strategic analysts often use Porter’s five forces to understand whether new products or services are potentially profitable. By understanding where power lies, the theory can also be used to identify areas of strength, to improve weaknesses and to avoid mistakes.
Porter’s five forces of competitive position analysis:
The five forces are:
1. Supplier power. An assessment of how easy it is for suppliers to drive up prices. This is driven by the: number of suppliers of each essential input; uniqueness of their product or service; relative size and strength of the supplier; and cost of switching from one supplier to another.
2. Buyer power. An assessment of how easy it is for buyers to drive prices down. This is driven by the: number of buyers in the market; importance of each individual buyer to the organisation; and......

...Introduction:
In 1979, Harvard Business Review published “How Competitive Forces Shape Strategy” by a young economist and associate professor, Michael E. Porter. It was his ﬁrst HBR article, and it started a revolution in the strategy ﬁeld. In subsequent decades, Porter has brought his signature economic rigor to the study of competitive strategy for corporations, regions, nations, and, more recently, health care and philanthropy.
“Porter’s ﬁve forces” have shaped a generation of academic research and business practice. With prodding and assistance from Harvard Business School Professor Jan ‘ Rivkin and longtime colleague Joan Magretta, Porter here reaffirms, up-dates, and extends the classic work. He also ad-dresses common misunderstandings, provides
practical guidance for users of the framework, and offers a deeper view of its implications for strategy today.
In essence, the job of the strategist is to understand and cope with competition. Often, however, managers deﬁne competition too narrowly, as if it occurred only among today’s direct competitors. Yet competition for proﬁts goes beyond established industry rivals to include four other competitive forces as well customers, suppliers, potential entrants, and substitute products. The extended rivalry that results from all ﬁve forces deﬁnes an industry’s structure and shapes the nature of competitive interaction within an industry. As different from one another as industries might appear on the surface, the underlying...

...Porter’s Five Forces model
The five forces model of analysis was developed by Michael Porter to analyze the competitive environment in which a product or company works. It identifies the five most common threats faced by firms in their local competitive environments and the conditions under which these threats are more or less likely to be present; these forces are the threat of entry, threat of rivalry, threat of substitutes, threat of buyers and the threat of suppliers. These threats increases a firm's costs, decreases a firm's revenues, or in other words they reduces a firm's performance.
Industry Structure
This model analyzes industry structure and by definition an industry is a group of firms that market products which are close substitutes for each other. Guardian Life Limited offers services such as Individual Benefit Plan and Employee Benefit Plan. The individual benefit plan includes benefits such as Critical Illness Plans, Traditional Insurance Plans, Universal Life & Equity Linked Plans, Interest Sensitive Plans, and other Plans. Also the Employee benefit plan includes: Group Life Insurance, Group Health Insurance, and Pension Administration. We will now state how the 5 forces model applies to Guardian Life Limited.
Threat of Entry
One reason why new entrants pose threat is that they bring additional production capacity. Unless the demand for a good or service is increasing, additional capacity holds consumers’ costs down, resulting in less revenue and......

...PORTER’S FIVE FORCES MODEL
Porter’s five forces is a framework developed by economist Michael E. Porter to analyze level of competition within an industry and business strategy development. Further, it determines the probability and attractiveness of a market or market segment. In 1979, Porter was an associate professor at Harvard Business School, the Porter’s framework maintains that the attractiveness of a market segment is determined by five competitive forces namely:
1. Threats of potential new entrants
2. Bargaining power of buyers
3. Bargaining power of suppliers
4. Threats of substitute products
5. Rivalry among competitors
1. Threats of potential new entrants
The threat of new entrants is usually based on the market entry barriers, which can be said to provide obstacles for newcomers to gain a foothold in any given industry. These barriers can take many different forms. Briefly, it can be said that entry barriers exist whenever it is difficult or not economically feasible for an outsider to copy or imitate the existing player’s competitive capabilities. Common forms of entry barriers are depicted below:
* Economies of scale
* Capital requirement of entry
* Access to supplies and distribution channels
* Customer or supplier loyalty
* Lack of experience in industry
* Legal restrains such as trade barriers
2. Bargaining Power Of Buyers
Important determinants of buyer power are the size and the......

...Porter’s Five forces and SWOT analysis on Breadtalk in Singapore
Introduction
BreadTalk Group Limited is a bakery in Singapore and was founded in the year 2000, like any other business Breadtalk is in regular pressure to improve their levels of performance and efficiency, with this in mind, this essay shall give a comprehensive study of diverse aspects that have made it possible for Breadtalk to stay gainful despite the critical business environment. This shall be achieved by performing a comprehensive Strength, weakness, Opportunity and Threat (SWOT) analysis and Porters Five forces analysis.
SWOT analysis
Strength
The concept of Breadtalk is exclusive and inventive and this differentiates the brand from usual bakeries in the market. Breadtalk has standardized the design across all branches and is widely recognized for its attractive and eye-catching layout.
Breadtalk vends a large range of buns, bread, pastries and cakes which is a very unique concept from the traditional bakeries in the market; every retail channel of Breadtalk presents about 40 to 60 special items day by day. (Ball, 2012)
The Breadtalk group has a chain of approx 40 retail outlets island-wide in Singapore, it has existence in countries like Kuwait, Oman, Jordan, Saudi Arabia, India and Bahrain and thus it has captured strong market interest, which has helped in increasing its brand awareness.
Weakness
Breadtalk products are priced slightly higher than the products of other bakers, which might...

...The five Forces
Competing for profits
The term competence is not about to beat your enemy with a profit. But compete for a profit is more complicated than it seems. Is not just compete with your enemy but with other participants involved as customers, who jostle for good quality products at a good price. Compete with suppliers who prefer to be paid better and deliver fewer products and compete with producers who could replace at any time.
The Porter's Five Forces tool is a simple but powerful tool for understanding where power lies in a business situation. This is useful, because it helps you understand both the strength of your current competitive position, and the strength of a position you're considering moving into. With a clear understanding of where power lies, you can take fair advantage of a situation of strength, improve a situation of weakness, and avoid taking wrong steps. This makes it an important part of your planning toolkit. Conventionally, the tool is used to identify whether new products, services or businesses have the potential to be profitable. However it can be very illuminating when used to understand the balance of power in other situations. These five forcers, the intensity of rivalry among existing competitors, the bargaining power of buyers (the industry’s customers), the bargaining power of suppliers, the threat of substitutes, and the threat of new entrants determine the industry’s structure.
Before Porter, the prevailing framework for......

...IBM and Porter’s Five Competitive Forces
Alexis DiOrrio
September 21, 2015
Wilmington University
History and Financial Analysis
IBM or International Business Machines is a well-known American Computer
manufacturer, founded by Thomas J. Watson (Bellis, 2015). They are also known as the “Big Blue” after the color of its logo. The company has manufactured everything from mainframes to personal computers and has been extremely successful selling business computers (Bellis, 2015). What started the beginning of IBM’s history, was on June 16, 1911 when three successful companies merged together; The Tabulating Machine Company, The International Time Recording Company, and The Computing Scale Company of America. These three companies joined together and formed one company, The Computing Tabulating Recording Company. In 1924, Watson changed the company’s name to what we know today as IBM (Bellis, 2015). IBM began manufacturing calculators in the 1930s, using the technology of their own punch card processing equipment. The financed the invention of the Mark 1 Computer with Harvard University in 1944. By 1953, IBM was ready to produce their own computers, which began with the IBM 701 EDPM, which was their first commercially successful general-purpose computer (Bellis, 2015). In 1980, Bill Gates agreed to create an operating system for IBM’s computer for the home consumer. Once IBM had now stepped into the home consumer market it sparked the computer revolution.
Below...

...Porter’s Five Forces Analyses
Threat of New Entrants - Low
According to Porter (1985), potential competitors in any market are faced with challenges that new entrants often have including sales channels, costs of conversion and funding needs. (Dr. Antony Michail, 2011) Throughout the recession Tesco has continued to invest into expanding the company and developing efficiencies, making it as competitive as ever to defend against the threat of new entrants (Datamonitor, 2010).The threat of a new competitor entering this sector is relatively low, due to the huge capital investment required to be competitive and establish a brand identity that stands out. Tesco and other large supermarket are able to purchase large volumes of goods in lower price. In contrast, smaller new entry companies are more likely to buy smaller volumes at higher prices. New firms also have to be aware that Tesco already have loyalty customers. All of which helps to protect them from the threat of new competitors. Therefore, the successful entry of new threats is minimal.
Threat of New Substitutes products or services - High
According to Porter (1985), the threat of substitute products and services offered by an organization depends on propensity of the buyer to substitute, switching cost that the buyer will incur, perceived product or service differentiation level, the number of substitute products or services in the market ease of substitution and quality depreciation among other factors. (Dr. Antony...

...has become less profitable because of the decrease in 2015.
From 2013 to 2014 total liability decreased by 10.4% and from 2014 to 2015 it decreased by 3.3%. This increase was caused by Target making purchases on accounts rather than spending their cash on hand and by receiving money in advance before earning the money. Meanwhile, because the liability has decreased the total debt ratio reveals that Target is a not a stable company and do not have the ability to pay off its liabilities with its assets. In 2013 total debt ratio was 1.06 which means the company approximately had 4 times as many assets than liabilities. In 2015 it decreased to 0.91 which is still low because they had twice as many assets as liabilities
Assessing Porters Five Force Model
Rivalry among Competitors
The competition level in the retail industry is a high threat. Discount retailers compete with other wholesale clubs, supermarkets, and online retailers. Target Corp. has three main rivals; Walmart, Home Depot, Seers and Costco Wholesale Corp. The resemblance in the products and service offered by competitors pose a great threat, because it conflicts consumers emotions on which product is actually the best. Target Corporation plans to excel in the retailer industry by strengthen their use of internet access. Target’s usage of internet practices has grown because of their increase in launching internet ads, partnership, and etc via its website.
Power of Suppliers
The bargaining power of suppliers...

...determining strategy, Porter's five-forces model looks at the strength of five distinct competitive forces, which, when taken together, determine long-term profitability and competition. Porter's work has had a greater influence on business strategy than any other theory in the last half of the twentieth century, and his more recent work may have a similar impact on global competition.
Michigan native Michael Porter was born in 1947, was educated at Princeton, and earned an MBA (1971) and Ph.D. (1973) from Harvard. He was promoted to full professor at Harvard at age 34 and is currently C. Roland Christensen Professor of Business Administration at the Harvard Business School. He has published numerous books and articles, the first Interbrand Choice, Strategy and Bilateral Market Power, appearing in 1976. His best known and most widely used and referenced books are Competitive Strategy (1980) and Competitive Advantage (1985). Competitive Strategy revolutionized contemporary approaches to business strategy through application of the five-forces model. In Competitive Advantage, Porter further developed his strategy concepts to include the creation of a sustainable advantage. His other model, the value chain model, centers on product added value. Porter's work is widely read by business strategists around the world as well as business students. Any MBA student recognizes his name as one of the icons of business literature. The Strategic Management Society named Porter the most......

...Porter’s Competitive Forces Model
Question: Why was allocated model developed?
In the 1970’s, there was a change in market place of the industries. The industries were transforming from local sellers to global sellers. At that time the industries needed to know and strengthen their competitive position in order to survive in the market place. Competition was increasing because of the change in market place. Earlier, industries used to sell their products to the local buyers only. But lately, they had started selling their products globally. Thus, due to this change in the buyer community there was a need for industries to protect themselves against competition from other industries and achieve competitive advantage. (Kippenberger, 1996)
Competitive advantage is like achieving a better place than competitors. The industries can achieve competitive advantage by proper formulation and analysis of their strategies. Michael Porter (1979) developed five forces model for strategy analysis and formulation. These forces analyze the opportunities available and threats to the industries. Thus the analysis helps the managers gain a better understanding of the strategies that are useful for industries to achieve their goals. (Kippenberger, 1996)
Question: What is the model?
Porter’s Competitive Forces Model is for strategy analysis. The model represents five major external forces that can affect a company’s profitability and competitive advantage. Threats of entry, Powerful...

...Porter's 5 forces model is a powerful way of analysing the competitive forces that shapes every industry in general. This was developed by Michael E. Porter of Havard Business School in 1979. This tool helps you to identify whether a new product, investment, services or business have the potential to be profitable.
The 5 competative forces that are taken into consideration are:
Competition in the Industry
Potential of new entrant into Industry
Power of Suppliers
Power of Customers
Threat to substitute products
Lets discuss each of these points in detail:
Competition in the Industry:
This describes the competition between the existing firms in an industry. Greater the competitive riverly (companies providing equally good products or services) lesser are the profit margin. The price of the product/services is the single most defining factor that influences the customer's buy decision. Hence to maintain low cost, companies consistently has to make manufacturing improvements to keep the business competitive. This requires additional capital expenditure which tends to eat up company's earning. On the other hand if no one else can provide products/ services the way you do you have a monopoly.
Lets try to explore these points in more detail. Look at the current senario, the small car market in India is very competitive with players like Maruti Suzuki, Tata Motors, Huyndai etc. which was preety much dominated by Maruti. But with launch of Nano the 1 lakh car the...